NEW DELHI | MUMBAI: A State Bank of India-led consortium of lenders on Monday filed a plea in the Supreme Court seeking to be included in the proceedings of a case involving Aircel, saying they would be “severely” affected if the telco is restrained from earning revenue using its 2G airwaves, which would impact repayment to creditors.

The country’s largest public sector bank sought the apex court’s permission to be part of the proceedings, saying that it was “vitally interested” as the Chennai based carrier owed the bank and others a total of Rs 20,000 crore as of December 2016.

ET was the first to report on January 19 that the SBI-led consortium might approach the Supreme Court to make it a party to the case.

“In the event this court passes an order directing that Aircel be restrained from earning any revenue, by using 2G spectrum licences which were granted to them in November 2006, the same would severely affect all lenders as it would result in non-payment of dues owed to lenders,” the plea, filed by SBI and 11 other banks including Punjab National Bank, Bank of Baroda and Canara Bank, urged the court. ET has seen a copy of the plea.

The lenders assured the court that “there is no occasion for any benefit being passed on to (majority Malaysian stakeholder) Maxis or any persons as all amounts are to be deposited with SBI for benefit of lenders.” The banks added that, “no payments by way of dividends, profits or otherwise can be made to any of the shareholders of Aircel or Maxis unless all debt servicing obligations are met.” SBI did not immediately comment on the development.

The revenue generated by Aircel through use of licences and spectrum is “principal security” and the primary means of servicing debts due to SBI, other public sector banks and foreign lenders, which have advanced huge sums of money for the business and operations of Aircel.

In its plea to the apex court, the lenders said that shares of Aircel are secured with them and cannot be transferred or sold by shareholders without their consent.

Hence, the SC can give them the right to oversee all assets so that they’re not diluted. They also appealed that the court need not attach Aircel’s spectrum, licences, moveable or immovable assets, network equipment and its equity including redeemable shares, as they are secured with the bankers.

Dues owed to local banks including SBI is Rs 12,627 crore, foreign currency debt is Rs 595 crore and that from bank guarantees and letters of credit stands at Rs 3,232 crore. Maxis Communications Berhad, which owns 74% of Aircel, has since December 2005 invested Rs 33,000 crore in the unit through equity contributions, redeemable preference shares and shareholder loans.

SC THREATEarlier this month, the court said it would revoke Aircel’s licence if promoter T Ananda Krishnan and former executive Ralph Marshall, who ran Maxis, the parent company of Aircel at the time of the acquisition, didn't appear in an ongoing case of corruption in a lower court.

The court barred the transfer or sale of Aircel’s 2G airwaves to a third party in the interim. The top court had also asked the telecom department to look for an alternative service provider for Aircel’s 91 million subscribers, and it could even consider auctioning the spectrum.

The Department of Telecommunications (DoT) on Friday directed Aircel to inform about 40 million customers to provisionally switch to other operators if they want to continue their mobile services in case of an adverse order. Aircel, however, has objected to that, saying it was too premature for DoT to take action or for the telco to be sending such a message, and that they should wait till the next hearing on February 3 or till a final order is passed.

The Supreme Court developments, coupled with the latest diktat from DoT, cast a deep shadow on the proposed merger between Aircel and Reliance Communications, as well as on the latter’s deal to sell its tower business to Brookfield. Any move to bar revenue generation can hurt valuations.

TRANSFERING LICENCEIn its plea to the apex court, the lenders said that as per a tripartite agreement with lenders and DoT, lenders shall be permitted to assign or transfer the licence in favour of a party nominated by lenders and approved by DoT.

Lenders said approval of the execution of the tripartite agreement is awaited from DoT, while Aircel has created a charge over the licences and spectrum.

A trust and retention account (TRA) under SBI was created in May 2014 to monitor all receivables including revenue of Aircel, and between August 2014 and December 2016 about Rs 38,600 crore has been deposited. These funds are utilised for making licence fee payments, operational costs, capital costs, debt obligations, debt service reserve, in that order.

Payments to shareholders only happen after all these obligations are checked off. As an example of how lenders have been paid, SBI said in its plea that in the sale of 2300 MHz spectrum of Aircel to Airtel in April 2016 for a total of Rs 4,023 crore, Rs 1,630 crore was paid to DoT and Rs 1,444 crore was prepaid to lenders, while Rs 949 crore was deposited in the TRA.

GTL INFRA STANCEAdding another dimension to the ongoing legal issues, Chennai Network Infrastructure, the company GTL Infra had bought from Aircel with 17,000 towers in 2010, has sought legal advice saying Aircel's spectrum, customers and vendors are synonymous and it stands to lose unless conjoined with any handing over that may be court mandated, said a person familiar with the application.

The application being drafted further highlights that business prospects for vendors have already seriously been harmed by the licence cancellation in the wake of the 2G scam and the stalling of BSNL contracts.

“We are seeking appropriate legal advice to protect the interests of the lenders, investors and all other stakeholders including GTL Infra, GTL Ltd and their respective lenders,” the company confirmed.

Aircel is in the crosshairs of criminal conspiracy and corruption charges filed by the Central Bureau of Investigation against former telecom minister Dayanidhi Maran and his brother and Sun TV promoter Kalanithi Maran in 2011. The former telecom minister allegedly forced former Aircel promoter and serial entrepreneur C Sivasankaran to sell his stake in Aircel to Maxis, before awarding Aircel 14 telecom licences suggesting there was a quid quo pro.

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Key things to know about Rcom-Aircel merger

Reliance Communications (RCom) and the promoters of Aircel are set to ink a "binding definitive" pact in around two weeks to merge their wireless businesses.

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The deal is expected to close in next six-seven months (by the end of this year), according to the information available.

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The combined entity will need to pay around Rs500 crore to the telecom department to liberalise RCom's 2G airwaves in 14 circles for the balance five years till permit expiry in those service areas

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RCom and Aircel will each transfer Rs 14,000 crore of their debt into the merged entity. RCom has a gross debt of Rs 42,651 crore while it is Rs 23,436 crore for Aircel.

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The RCom-Aircel deal would create an entity with revenue of about Rs 25,000 crore annually, earnings before interest, taxes, depreciation and amortisation of about Rs 6,000 to Rs 6,500 crore and an Ebitda margin of 25%., with cash flows of around Rs3,000 crore a year to start with.

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Sources had told ET previously that once the synergies - estimated at Rs 2,500 crore annually - get fully panned out post-merger, the plan is to bring on board another foreign investor within a year who will infuse $500 million (Rs 3400 crore).

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RCom is currently in the process of merging operations with Sistema Shyam Teleservices Ltd. It recently received a nod from CCI to acquire SSTL (MTS). RCom had announced acquisition of Sistema's Indian telecom unit in an all-stock deal.

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RCom-Aircel-MTS combined will hold around 19% of the total spectrum in the country across of the 4G bands of 800 Mhz and 1800 Mhz and 3G bands of 2100 Mhz and 900 Mhz. It will have around a 180 million subscribers

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RCom is currently migrating its CDMA customers of to Jio's 4G network. It had inked a spectrum sharing agreement with Reliance Jio Infocomm.

Jio’s Rs 2,399 annual plan offers 2GB per day data that costs effectively Rs 200 per month. It also offers unlimited voice and SMS. Airtel and Vodafone Idea’s Rs 2398 and Rs 2399 annual plans, on the other hand, offer 1.5GB per day data along with unlimited voice and SMS